Chipotle's E. coli problem spreads to 6 states, stock gets crushed

The US Centers for Disease Control and Prevention issued an
update
on E. coli infections linked to Chipotle on Friday.

Following this news, shares of the company fell 12.5%.

According to the CDC, 45 people infected with a strain of
the bacteria — called the Shiga toxin-producing Escherichia coli
O26 (STEC O26) — have been reported in six states.

Forty-three of these people had reported eating at a
Chipotle in the week before their illness started.

"The epidemiologic evidence available at this time suggests
that a common meal item or ingredient served at Chipotle Mexican
Grill restaurants in several states is a likely source of this
outbreak," the CDC's statement said.

The CDC said that its investigation is still ongoing and
will update with more information if it can recommend specific
steps for consumers to take.

Washington had the most reported cases of E. coli, with 26
identified patients. Other states with E. coli patients include
California, Minnesota, Ohio, New York, and Oregon.

In a
statement, Chipotle said that it was taking "aggressive
steps" to ensure the safety of its food.

Of course, any investor in the restaurant business will be aware
of the risks posed by disruptions in a company's supply chain, or
the risks related to an outbreak of any food-borne illness at the
company's restaurants.

On a small number of occasions one or more Chipotle
restaurants have been associated with customer illness, and on
those occasions our sales have sometimes been adversely impacted,
at times even in markets beyond those impacted by the illness. If
our customers become ill from food-borne or localized illnesses
or if an illness is attributed to our food, even incorrectly, we
could also be forced to temporarily close some restaurants,
further impacting sales. In addition, reports linking nationwide
or regional outbreaks of food-borne illnesses have caused us to
temporarily suspend serving some produce items in our foods or to
otherwise alter our menu. Similarly, past outbreaks of E. coli
relating to certain food items caused consumers to avoid certain
products and restaurant chains, Asian and European countries have
experienced outbreaks of avian flu, and incidents of “mad cow”
disease have occurred in Canadian and U.S. cattle herds. These
problems, other food-borne illnesses (such as hepatitis A or
norovirus) and injuries caused by food tampering have had in the
past, and could have in the future, an adverse effect on the
price and availability of affected ingredients.